US sanctions blocked Russian LNG exports. The project has stalled

Luc Williams

Arctic LNG Plant 2 started production in December, but has so far failed to export gas due to US restrictions. According to Bloomberg data, in February it was necessary to significantly reduce production. According to the Vedomosti newspaper, which was the first to report the decline in production at the Arctic LNG 2 plant, the Russian LNG producer it is unable to export fuel and at the same time there is no place to store it.

Meanwhile, Novatek PJSC, the main shareholder of the factory located above the Arctic Circle, planned to start deliveries by the end of March.

Date of first delivery to China unknown

The Russian company is in talks to sell its first shipment to buyers in China. However, according to anonymous Bloomberg sources, the timing of potential deliveries is still unclear due to fear of retaliation from the US.

The difficult times Novatek is currently experiencing show how difficult it will be for Russia to achieve its goal of approximately tripling LNG exports by 2030.

Gas production under the project in February Arctic LNG 2 amounted to 83 million m3, compared to 250 million m3 in January and 425 million m3 in December, according to Bloomberg data.

A new wave of growth in LNG supplies. Qatar and the United States are the leaders / Bloomberg

Before invasion of Ukraine, which caused Europe to abandon gas supplies via pipelines, Russia was the world's largest gas exporter. Meanwhile, current exports are estimated at approximately 32 million tons of LNG. Last year, super-chilled fuel from Russia accounted for a fraction of total global trade of 412 million tonnes, according to ship tracking data.

Sanctions thwarted Russia's plans

In November, the United States imposed targeted restrictions on Novatek that all but drove out other investors in Arctic LNG 2, including TotalEnergies and Mitsui & Co.

The sanctions also thwarted plans to admit specialized icebreakers needed to cross frozen waters to the plant.

Novatek has talked to buyers in China about selling the cargoes on a one-time or long-term basis, but few companies are willing to take the risk of potentially becoming entangled in U.S. sanctions, the people said.


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